Ah, to be young and penniless! There’s nothing quite like the hope and enthusiasm of youth combined with the emptiness of one’s bank account. The young generations today, and by that we mean Gen Z, might be more financially savvy than their predecessors, but temptations are also bigger and this means there are more than enough ways to squander your money. Besides, young people have a lot of things on their minds these days, and financial management is probably not at the top of the list.
Then again, saving money when you’re young and don’t have much money to begin with sounds a bit like a contradiction. The current economic outlook and the sheer size and complexity of the modern financial systems, with new assets like Bitcoin and Ethereum adding a new layer of intricacy, don’t make things any easier either.
However, just because saving money and keeping your finances in check as a young adult is difficult doesn’t mean you can’t put some money aside. By now, you’ve probably figured out that money doesn’t grow on trees and financial independence comes at a cost (pun intended). If you’ve got that out of the way, you can start thinking about making smarter financial choices early on so you’ll have fewer things to regret later in life. And we’re willing to chip in with a few sensible suggestions about money management that can set you on the right path.
Start with a budget
We know you’ve heard this advice a million times before, but with the risk of sounding like a broken record, we have to say it once again: you need to create a budget if you want to save money. The problem with budgeting is that in the minds of young and impressionable people, it translates directly into having to stop spending your money on the things that bring you joy and start living like a Buddhist monk.
Not that there’s anything wrong with the Buddhist monk lifestyle, but that’s not how budgeting works. It’s about knowing exactly how much money comes in and out of your pocket and making sure your recurring expenses match your income. This should help you figure out where you can save without having to give up on life’s small joys. Obviously, the most important thing about creating a budget is sticking to it, so you might want to work a bit on your self-control to make sure your plan is going to work.
Skip the coffee run
Speaking of self-control, how about toning your coffee addiction or any addiction for that matter, a notch or two? Popping up at the coffee shop every single day, and sometimes several times a day, has become a modern ritual, that is slowly but surely eating away at people’s finances.
Unnecessary coffee runs are the most relevant example for today’s society, but you can extend this to any habit that seems innocent at first glance but has a negative impact on your bank account. It’s often the small things like this that go under the radar that make the biggest difference in the long run.
You might not like to hear this, but you have to look further into the future and think about the long-term consequences of your actions. That carpe diem and YOLO mentality that many youngsters seem to abide by might make for some really interesting stories, but it’s certainly not going to help you on the financial front.
Don’t be a financial procrastinator
Procrastination is a modern-day epidemic and we’re all guilty of it, so we’re not going to cast stones if you’re a serial procrastinator. But we’re going to point out how important it is to try to overcome it, at least when it comes to your finances.
It’s easy to put off budgeting and money management and say you’re going to do it later. And the next thing you know, you’re approaching retirement and you don’t have one dime in your savings account. This scenario might be overly dramatic, but you get the point. The best time to save and invest is now or yesterday. Yes, you should be saving and investing as we speak, or at least start after you’ve finished reading this article.
Think before you buy
Good money habits aren’t formed overnight, that’s why you have to nurture them when you’re young and you don’t have any fortune to waste just yet. If you want to become a more responsible spender, start by being more mindful about the purchases you make.
Ask yourself a few questions before you add a product to your cart. Do you really need it or is it just a whim? Can you find it cheaper somewhere else? Are you buying it just because it’s on sale? Is that new pair of shoes going to fix all your issues? The answers to these questions can help you cut back on unnecessary expenses and leave you with more money in your bank account at the end of the month.
Have an emergency fund, just in case
It’s definitely better to go through life feeling like the whole universe is on your side and nothing bad could ever happen to you than to be crippled by constant worry and anxiety. It’s even better to avoid falling into those extremes and have a more leveled outlook where you acknowledge that life is filled with both opportunities and unexpected challenges.
That’s a long-winded way of saying that you should expect the unexpected and start an emergency fund, just in case. An emergency fund is going to provide peace of mind and help you get through difficult times, should you experience any financial hardships.
If you’ve made it to the end of this lecture, you can consider yourself an inquisitive and extremely patient young adult, and that in itself is a huge achievement. So, we’re not going to burden you with any more financial recommendations and advice, but wish you good luck in your money-saving journey.